Amendment: SEC Form 10-K/A filed by Nicholas Financial Inc.

NICHOLAS FINANCIAL, INC.

FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

1

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Executive Officers and Directors

Set forth below is certain information with respect to the individuals who are our directors and executive officers as of July 24, 2024:

2

3

Material Changes in the Procedures by which Stockholders May Recommend Nominees to the Board

Prior to the Company’s conversion in 2024 from a British Columbia, Canada corporation into a Delaware corporation (the “Conversion”), the Company’s Board of Directors (the “Board”) had been divided into three classes with each class serving three-year terms expiring at the third Annual Meeting of Stockholders after their election. Following the Conversion, each director now serves until the next Annual Meeting of Stockholders or until his or her successor is elected, whichever is later, and the process for recommending nominees to the Board has changed.

4

Prior to the Conversion, the Company, as a British Columbia, Canada corporation, was governed by the British Columbia Business Company Act (“BCBCA”), pursuant to which shareholder proposals could have been made by registered or beneficial owners of shares entitled to vote at general meetings of stockholders who have been the registered or beneficial owner of such shares for an uninterrupted period of at least two years before the date of signing of the proposal, and who together in the aggregate constituted at least 1% of the issued shares that carried on the right to vote at general meetings or had a fair market value of shares in excess of CAD $2,000. Those registered or beneficial holders had to, alongside the proposal, submit and sign a declaration that provided the requisite information under the BCBCA. To be a valid proposal, the proposal would have had to be submitted at least three months before the anniversary of the previous year’s annual reference date. After such date, notice to the Company of a stockholder proposal submitted other than pursuant to Rule 14a-8 would have been considered untimely, and the persons named in proxies solicited by the Board for an Annual Meeting could have exercised discretionary voting power with respect to any such proposal (unless the date of such Annual Meeting was not within 30 days of first anniversary of the preceding year’s Annual Meeting, in which case the deadline would have been a reasonable time before the Company distributed the proxy materials for such Annual Meeting).

After the Conversion, the Company is a Delaware corporation governed by the Delaware General Corporation Law, and under the Company’s Bylaws (the “Bylaws”) nominations for the Board and other business may be brought before a meeting of stockholders solely by holders of those classes of stock entitled to voting rights as set forth in the Company’s Certificate of Incorporation, and solely in accordance with the provisions of Section 2.7 of the Bylaws. For such nominations for the Board or for such other business to be properly brought by a stockholder before a meeting of stockholders, the stockholder must first have given timely written notice thereof to the secretary of the Company. To be timely, a notice of nominations or other business to be brought before an Annual Meeting of stockholders must be delivered to the secretary not less than 90 nor more than 120 days prior to the first anniversary of the date of the Company’s Annual Meeting of the preceding year, or if the date of the Annual Meeting is more than 30 days before or more than 60 days after such anniversary, such notice must be delivered not earlier than 90 days prior to such Annual Meeting and not later than the later of (i) 60 days prior to the Annual Meeting or (ii) 10 days following the date on which public announcement of the date of such Annual Meeting is first made by the Company.

The notice for any such proposal must contain (i)(A) the name and address of the stockholder delivering the notice and a statement with respect to the amount of the Company’s stock beneficially and/or legally owned by such stockholder, (B) the nature of any such beneficial ownership of such stock, (C) the beneficial ownership of any such stock legally held by such stockholder but beneficially owned by one or more others, and (D) the length of time for which all such stock has been beneficially or legally owned by such stockholder, and (ii) information about each nominee for election as a director substantially equivalent to that which would be required in a proxy statement pursuant to the Exchange Act, and the rules and regulations promulgated by the SEC thereunder, or (iii) a description of the proposed business to be brought before the meeting, as the case may be. The foregoing notice requirements shall be deemed satisfied by a stockholder with respect to business other than a nomination if the stockholder has notified the Company of his, her or its intention to present a proposal at an annual meeting in compliance with applicable rules and regulations promulgated under the Exchange Act and such stockholder’s proposal has been included in a proxy statement that has been prepared by the Company to solicit proxies for such annual meeting.

Committees of the Board of Directors and Meeting Attendance

During the Company’s fiscal year ended March 31, 2024, there were four meetings of the Board, four meetings of the Audit Committee, one meeting of the Compensation Committee and one meeting of the Nominating/Corporate Governance Committee, and each incumbent director attended at least 75% of the aggregate of (i) the total number of Board meetings held during the period for which he has been a director and (ii) the total number of meetings of all committees of the Board on which he served held during the periods that he served.

In addition to an Investment Committee, the Board of Directors of the Company has the standing committees listed below.

Audit Committee

On April 1, 2004, the Board of Directors established an Audit Committee, which was comprised of three members during the fiscal year ended March 31, 2024. The committee consists of Messrs. Hutchins (Chair), Keating, and Zhu. The Board has determined that Messrs. Hutchins, Keating and Zhu satisfy the independence requirements of current SEC rules and NASDAQ listing standards. The Board also has determined that each of Messrs. Hutchins, Keating, and Zhu qualify as an audit committee financial expert as defined under these rules and listing standards.

5

The Audit Committee assists the Board of Directors with its responsibilities by (A) overseeing the Company’s accounting and financial reporting processes and the audits of the Company’s consolidated financial statements and (B) monitoring (i) the Company’s compliance with legal, risk management and regulatory requirements, (ii) the Company’s Independent Registered Public Accounting Firm’s qualifications and independence, (iii) the Company’s financial reporting process and Independent Registered Public Accounting Firm, and (iv) the Company’s systems of internal control with respect to the integrity of financial records, adherence to its policies and compliance with legal and regulatory requirements. Among other functions, the Audit Committee has direct responsibility to appoint, compensate, retain and oversee the Company’s Independent Registered Public Accounting Firm; has sole authority to pre-approve all audit and non-audit services performed by the Company’s Independent Registered Public Accounting Firm and the fees and terms of each engagement; prepares or authorizes, oversees and reviews the Audit Committee Report; discusses with management and the Independent Registered Public Accounting Firm reports from the Independent Registered Public Accounting Firm with respect to certain audit matters; reviews the Company’s annual and quarterly consolidated financial statements and related public disclosures, earnings press releases and other financial information and earnings guidance provided by the Company; reviews with management the adequacy of internal controls; and reviews and approves related party transactions. The Audit Committee is governed by a written charter, which sets forth the specific functions and responsibilities of the Audit Committee. A copy of the current Audit Committee charter is available on the Company’s web site at www.nicholasfinancial.com under “Investor Center – Corporate Governance.”

Compensation Committee

On June 30, 2005, the Board of Directors established a Compensation Committee, which was comprised of three members during the fiscal year ended March 31, 2024. The committee consists of Messrs. Keating (Chair), Royal, and Zhu. The Board has determined that Messrs. Keating, Royal, and Zhu satisfy the independence requirements of current SEC rules and NASDAQ listing standards, that they are “non-employee directors” pursuant to Rule 16b-3 under the Exchange Act, and that they are “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended.

The principal responsibilities of the Compensation Committee are to evaluate the performance and approve the compensation of the Company’s Chief Executive Officer and other executive officers and to approve the compensation of non-employee directors; review and endorse a compensation philosophy that supports competitive pay for performance and is consistent with the Company’s corporate strategy; prepare an annual report on executive compensation for inclusion in the Company’s proxy statement; and assist the Board in establishing, and to administer, the Company’s incentive compensation and equity-based plans for key employees and non-employee directors, including the Nicholas Financial, Inc. Equity Incentive Plan and the Nicholas Financial, Inc. 2015 Omnibus Incentive Plan.

The Compensation Committee reviews and approves corporate goals and objectives relevant to the Company’s Chief Executive Officer’s compensation, evaluates the Chief Executive Officer’s performance in light of these goals and objectives and establishes his compensation levels based on its evaluation. The specific functions and responsibilities of the Compensation Committee are set forth in its written charter. A copy of the current Compensation Committee charter is available on the Company’s web site at www.nicholasfinancial.com under “Investor Center – Corporate Governance.”

The Compensation Committee may designate one or more subcommittees, each of which must consist of two or more members of the Compensation Committee. Each subcommittee will have and may exercise all the powers and authority of the Compensation Committee, to the extent provided in the committee’s resolutions and to the extent not limited by applicable law or listing standard.

Nominating/Corporate Governance Committee

On June 30, 2005, the Board of Directors established a Nominating/Corporate Governance Committee, which was comprised of three members during the fiscal year ended March 31, 2024. The committee consists of Messrs. Zhu (Chair), Hutchins and Royal.

The Board has determined that Messrs. Zhu, Hutchins, and Royal satisfy the independence requirements of current NASDAQ listing standards.

6

The principal functions of the Nominating/Corporate Governance Committee are to: identify, consider and recommend to the Board qualified director nominees for election at the Company’s annual meeting; review and make recommendations on matters involving the general operation of the Board and its committees and recommend to the Board nominees for each committee of the Board; and develop and recommend to the Board the adoption and appropriate revision of the Company’s corporate governance policies. The Nominating/Corporate Governance Committee is governed by a written charter, which is reviewed on an annual basis. A copy of the current Nominating/Corporate Governance Committee charter is available on the Company’s web site at www.nicholasfinancial.com under “Investor Center – Corporate Governance.”

Anti-Hedging Policy

The Company’s Insider Trading Policy prohibits any hedging transactions with respect to the Company’s securities.

Code of Ethics

The Company has adopted a written code of ethics applicable to its Chief Executive Officer, Chief Financial Officer, principal accounting officer and persons performing similar functions. A copy of the code of ethics is posted on the Company’s web site at www.nicholasfinancial.com. Anyone who wishes to receive a written copy of the code of ethics may receive one without charge by submitting a request in writing to Corporate Secretary, Nicholas Financial, Inc., 26133 US HWY 19 North, Suite 300, Clearwater, Florida 33763. The Company intends to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding amendments to, or waivers from, the code of ethics by posting such information on the Company’s web site at www.nicholasfinancial.com. The Company is not including the information contained on or available through its web site as a part of, or incorporating such information by reference into, this Report.

Item 11. Executive Compensation, Compensation Interlocks and Insider Participation

The Company has opted to comply with the scaled disclosure requirements available to “smaller reporting companies” as such term is defined in Regulation S-K.

Role of the Compensation Committee

The Compensation Committee is responsible for:

Through this process, the Committee reviews and determines all aspects of compensation for the Named Executive Officers (as defined below) of the Company.

The “Named Executive Officers” of the Company are:

Compensation Committee Interlocks and Insider Participation

None of the members of our Compensation Committee was, during the fiscal year ended March 31, 2024, an officer or employee of ours, was formerly an officer of ours or had any relationship requiring disclosure by us under Item 404 of Regulation S-K. No interlocking relationship as described in Item 407(e)(4) of Regulation S-K exists between any of our executive officers or Compensation Committee members, on the one hand, and the executive officers or compensation committee members of any other entity, on the other hand, nor has any such interlocking relationship existed in the past.

7

Process for Determining Executive Compensation

The Compensation Committee is responsible for establishing and monitoring adherence to the Company’s compensation programs. When setting executive compensation, the Compensation Committee applies a consistent approach for all Named Executive Officers. It intends that the combination of elements of executive compensation closely align the executives’ interest with those of the Company’s stockholders. Target total compensation is generally comprised of base salary, annual cash bonus and incentive compensation in the form of equity grants. The Compensation Committee reviews and adjusts executive target total compensation levels annually, and approves the base salary, annual cash bonus and incentive equity awards for each Named Executive Officer.

As part of the compensation process, the Compensation Committee seeks input and information from the CEO and the full Board of Directors before finalizing any salary increases, employment contracts, bonus plans or long-term incentive equity awards for Named Executive Officers. In considering the appropriate compensation for each of the Named Executive Officers, the Compensation Committee takes into consideration, among other things, the CEO’s recommendations, the executive pay for executive officers in comparable positions for companies in the Company’s peer group, the level of inherent risk associated with the position, the specific circumstances of the executive, and the advisory votes of the Company’s stockholders with respect to the compensation of the Named Executive Officer for prior fiscal years. The Compensation Committee has developed a compensation plan that it believes will achieve the following objectives:

Compensation Components

The Company’s executive compensation program currently consists of three key elements: base salary, annual incentive bonus and equity incentive compensation.

Base Salary

The Compensation Committee establishes base salaries for the Company’s Named Executive Officers based on the scope of their responsibilities, taking into account competitive market compensation paid by other companies in the Company’s peer group for similar positions. Generally, the Compensation Committee believes that executive base salaries should be targeted near the median of the range of salaries for executives in similar positions and with similar responsibilities at comparable companies in line with our compensation philosophy.

Base salaries are reviewed annually and may be adjusted to realign salaries with market levels after taking into account individual responsibilities, performance and experience.

The annual base salaries for Mr. Rost, the Company’s Chief Executive Officer, Mr. Krebs, the Company’s Chief Financial Officer and Corporate Secretary, and Ms. Nashtatik, the Company’s former Chief Financial Officer and Corporate Secretary, for the fiscal year ended March 31, 2024 (“Fiscal 2024”) were initially set at $250,000, $190,000, and $220,000, respectively.

8

Incentive Bonuses

For the Fiscal 2024, the Company did not pay any non-discretionary incentive bonuses in cash to Mr. Rost or Ms. Nashtatik.

Discretionary Bonuses

For the Fiscal 2024, the Compensation Committee retains sole discretion to pay each of Mr. Rost and Ms. Nashtatik a discretionary bonus of up to $100,000 for such fiscal year.

Equity Incentive Compensation

The Compensation Committee believes that stock-based awards promote the long-term growth and profitability of the Company by providing executive officers of the Company with incentives to improve stockholder value and contribute to the success of the Company and by enabling the Company to attract, retain and reward the best available persons for executive officer positions.

Prior to August 13, 2015, the Company maintained the Nicholas Financial, Inc. Equity Incentive Plan (the “Equity Plan”). The Equity Plan was terminated on August 13, 2015. While no new awards have been granted under the Equity Plan since that date, awards previously granted under such plan, remain outstanding. Effective August 13, 2015, the Company adopted the Nicholas Financial, Inc. 2015 Omnibus Incentive Plan (the “Omnibus Incentive Plan” or “Plan”). The Omnibus Incentive Plan allows for the grant of equity awards and cash incentive awards to eligible individuals, with up to 750,000 shares of Common Stock reserved for the grant of equity awards under the Plan. The administrator of the Omnibus Incentive Plan (currently the Compensation Committee of our Board of Directors) (the “Administrator”) may designate any of the following as a participant from time to time, to the extent of the Administrator’s authority: any officer or other employee of the Company or its affiliates (including the Named Executive Officers); any individual whom the Company or one of its affiliates has engaged to become an officer or employee; any consultant or advisor who provides services to the Company or its affiliates; or any director, including a non-employee director. Currently, the persons eligible to participate in the Plan consist of approximately two employees and five non-employee directors. A more detailed description of the Equity Plan can be found below under the heading “Summary of Equity Plan”. A more detailed description of the Omnibus Incentive Plan can be found below under the heading “Summary of Omnibus Incentive Plan”.

The employment agreement with Mr. Rost provides for a stock purchase matching program (the “Matching Program”), pursuant to which the Company would match 100% of the Company’s Common Stock purchased by Mr. Rost after the date of the employment agreement but before August 29, 2023 and, upon renewal of the term of the employment agreement, 100% of the Company’s Common Stock purchased by Mr. Rost before August 29, 2024, with such matching shares being restricted shares of Common Stock that would vest in equal 1/3 tranches on each anniversary of the grant date over three years so long as Mr. Rost’s employment with the Company continued. The amount of stock issuable under the Matching Program was capped at $50,000 for each period ending August 29, 2023 and August 29, 2024 ($100,000 in the aggregate) under Mr. Rost’s employment agreement. As of March 31, 2024, Mr. Rost has not purchased any Common Stock that would trigger the Matching Program.

The employment agreement with Ms. Nashtatik provided for a Matching Program, pursuant to which the Company would have matched 100% of the Company’s Common Stock purchased by Ms. Nashtatik before June 30, 2024, with such matching shares having been restricted shares of Common Stock that would have vested in equal 1/3 tranches on each anniversary of the grant date over three years so long as Ms. Nashtatik’s employment with the Company continued. The amount of stock issuable under the Matching Program was capped at $50,000 for each period ending June 30, 2023 and June 30, 2024 ($100,000 in the aggregate) under Ms. Nashtatik’s employment agreement. Ms. Nashtatik’s employment agreement has been terminated and she did not purchase any Common Stock that would have triggered the Matching Program prior to such termination.

Fiscal 2024 Equity Awards

The equity awards granted in Fiscal 2024 to the Named Executive Officers under the Omnibus Incentive Plan consisted solely of awards of time-vested restricted stock under the Matching Program.

Pursuant to the Matching Program, during Fiscal 2024, no shares of restricted stock were issued to Mr. Rost or Ms. Nashtatik.

9

Change of Control

The Company has change of control provisions in its employment agreements with its Named Executive Officers, the Equity Plan and the Omnibus Incentive Plan (including under the Performance Unit Program described below). The Company has no additional change of control contracts or arrangements with any of its Named Executive Officers. For further information regarding the employment agreements, see “Potential Payments Upon Termination or a Change of Control – Employment Agreements” and “Summary of Employment Agreements With Named Executive Officers”.

The change of control provisions in the plans and the employment agreements are designed to make a change of control transaction neutral to the economic interests of employees that might be involved in considering such a transaction. The employees subject to these provisions would likely not be in a position to influence the Company’s performance after a change of control or may not be in a position to earn their incentive awards or vest in their equity awards after a change of control. Thus, the provisions are meant to encourage employees that may be involved in considering a change of control transaction to act in the interests of the Company’s stockholders rather than their own interests.

The change of control provisions in the employment agreements with Named Executive Officers and under the Performance Unit Program are described under “Potential Payments Upon Termination or a Change of Control – Employment Agreements” and “– Equity Incentive Plans”. Generally, the Company’s equity compensation plans provide that restricted stock, restricted stock units and performance units will vest in full, and options to purchase shares of Common Stock will become immediately exercisable, either upon a change of control if the successor company does not assume or replace the award, or upon termination of employment without cause within one year after a change of control.

The Compensation Committee believes that the provisions provided for under the Named Executive Officers’ employment agreements and equity compensation plans are appropriate since an employee’s position could be adversely affected by a change of control even if he or she is not terminated. Our equity compensation plans provide, however, that the Compensation Committee may determine in advance of the change of control event that the provisions would not apply and therefore no accelerated vesting would occur.

Other Compensation

Consistent with the Compensation Committee’s pay-for-performance compensation philosophy, the Company intends to continue to maintain modest executive benefits and perquisites for executive officers; however, the Compensation Committee, in its discretion, may revise, amend or add to the officer’s executive benefits and perquisites if it deems it advisable. The Compensation Committee believes these benefits and perquisites are currently at or below median competitive levels for companies in the Company’s peer group. The Company does not provide pension arrangements, post-retirement health coverage, or similar benefits for its executives or employees.

Clawback Policy

We maintain a clawback policy that complies with the applicable listing standards of NASDAQ and Rule 10D-1 of the Exchange Act (the “Clawback Policy”), and is filed as Exhibit 97, “Policy for the Recovery of Erroneously Awarded Compensation”, to our Annual Report on Form 10-K for the fiscal year ended March 31, 2024. The Clawback Policy provides for the recovery or “clawback” of certain erroneously awarded incentive-based compensation in the event that the Company is required to prepare an accounting restatement resulting from material noncompliance with financial reporting requirements under federal securities laws.

10

Tax, Accounting and Other Considerations

Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), places a limit of $1,000,000 on the amount of compensation that we may deduct in any given year with respect to the CEO and certain of our other most highly paid executive officers. There was an exception to the $1,000,000 limitation prior to calendar year 2018 for performance-based compensation meeting certain requirements. Our stock option awards and performance-based restricted stock unit awards generally are performance-based compensation meeting those requirements and, as such, were typically fully deductible. Performance-based cash bonus compensation awards under our Management Incentive Compensation Program were also possibly tax deductible. Our annual base salary and time-based restricted stock units are generally subject to the Section 162(m) deduction limitations. As a result of the Tax Cut and Jobs Act, the performance-based exception to Section 162(m) has been eliminated, resulting in the foregoing performance compensation in excess of $1,000,000 in calendar year 2018 or later generally not being deductible for the Company, subject to the transition rule for plans and agreements in place on November 2, 2017. To maintain flexibility in compensating executive officers in view of the overall objectives of our compensation program, the Compensation Committee has not adopted a policy requiring that all compensation be tax deductible.

Summary Compensation Table

The following table sets forth for each of the Named Executive Officers (other than Charles Krebs, the Company’s Chief Financial Officer and Corporate Secretary, who did not commence service with the Company until June 19, 2024, after the end of the Company’s last completed fiscal year): (i) the U.S. dollar value of base salary and bonus earned during each of the fiscal years ended March 31, 2024 and 2023, respectively; (ii) the aggregate grant date fair value (in U.S. dollars) of stock and option awards granted during each of such fiscal years, computed in accordance with ASC Topic 718; (iii) the U.S. dollar value of all other compensation for each of such fiscal years; and (vi) the U.S. dollar value of total compensation for each of such fiscal years.

Narrative to Summary Compensation Table

For the fiscal year ended March 31, 2024, the executive compensation programs for our Named Executive Officers included some or all of the following:

We include further details regarding these programs, including information on performance criteria and vesting provisions, in the “Executive Compensation Discussion and Analysis” section. We include further details regarding each Named Executive Officer’s employment agreement (if any) in the “Summary of Employment Agreements with Executive Officers” section.

11

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information regarding outstanding option and stock awards held at March 31, 2024, by the Named Executive Officers (other than Charles Krebs, the Company’s Chief Financial Officer and Corporate Secretary, who did not commence service with the Company until June 19, 2024, after the end of the Company’s last completed fiscal year), including the number of shares underlying both exercisable and un-exercisable portions of each stock option, if any, as well as the exercise price and expiration date of each outstanding option, if any.

Potential Payments Upon Termination or a Change of Control

Employment Agreements

The Company has separate employment agreements with each of its current executive officers. The payments to be made to these executive officers pursuant to such employment agreements in the event of disability or death, involuntary termination without cause and termination following a change of control are described below. These employment agreements are described in greater detail under “Summary of Employment Agreements with Executive Officers” section.

Payments Made Under the Employment Agreements Upon Death or Disability

In the event of the termination of employment due to his or her death or disability, an executive officer will receive only such compensation and other benefits to which he or she was entitled under his or her employment agreement, under the terms of his or her outstanding equity plan awards (as described further below), or otherwise as an employee of the Company through the termination date, including payments of base salary through the calendar month in which such termination occurs.

12

Payments Made Under the Employment Agreements Upon Termination Without Cause, Constructive Termination or Change of Control

Michael Rost

In the event of the termination of Mr. Rost’s employment (i) by the Company other than for cause (as defined in his employment agreement) or (ii) by Mr. Rost upon (a) a good faith determination by Mr. Rost that there has been a material breach of his employment agreement by the Company, (b) a material adverse change in his working conditions or status, (c) a significant relocation of his principal office, or (d) upon or within the one-year period following a change of control, a good faith determination by him that there has been any of the following: a breach of his employment agreement by the Company, any adverse change in his working conditions, status, authority, duties, responsibilities (including reporting other than directly to the Board of Directors) or any requirement that he relocate his principal office to a location that is more than ten miles from the location of his principal office immediately prior to the change of control, then Mr. Rost will receive the following benefits:

(i) subject to the Section 280G cap described below, a one-time, lump-sum severance payment equal to Mr. Rost’s annual base salary in effect at the time of such termination, pro-rated for the number of days remaining in the then-current term (or, following a change of control, a one-time, lump-sum severance payment equal to Mr. Rost’s annual base salary in effect at the time of such termination);

(ii) all restricted stock (including shares under the Matching Program), restricted stock unit awards, stock options and stock appreciation rights will become fully and immediately vested;

(iii) any performance shares, performance units or similar performance-based equity awards will be deemed earned on a pro-rated basis according as if all performance requirements had been satisfied at the target level (or such higher level as would have been achieved if performance through the date of the termination of employment had continued through the end of the performance period);

(iv) up to twelve months of benefits continuation; and

(v) up to $7,500 of fees and expenses of consultants and/or legal or accounting advisors.

A “change of control” is defined in Mr. Rost’s employment agreement generally as (i) the sale of 100% of the Company, (ii) the Board as of September 14, 2022 (the “Rost Incumbent Board”) generally ceasing for any reason to constitute the Board, provided that any individual becoming a director subsequent September 14, 2022, whose election or nomination for election by the Company’s stockholders was approved by a unanimous vote of the directors then comprising the Rost Incumbent Board, is considered as though such individual were a member of the Rost Incumbent Board, (iii) completion of a reorganization, merger or combination in which 100% of the ownership changes, (iv) liquidation or sale of substantially all of the assets (except in limited circumstances) or (v) a determination by the Board of Directors of the Company, in view of the then current circumstances or impending events, that a change of control of the Company has occurred or is imminent, which determination shall be made for the specific purpose of triggering the operative provisions of the employment agreement.

If any severance payment, either alone or when added to any other payment or benefit to which Mr. Rost is entitled from the Company exceeds the amount that may be paid by the Company without a loss of deduction under Section 280G of the Code, then, under the terms of his employment agreement, the severance payment and any other such payment or benefit will be either cut back, to a level below the level that would trigger the loss of deduction, or paid in full and subjected to the loss of deduction and excise taxes, whichever results in the better after-tax result to the executive officer.

Charles Krebs

In the event of the termination of Mr. Krebs’ employment by the Company other than for cause (as defined in his employment agreement), then Mr. Krebs will receive the following benefits:

(i) severance pay equal to the full value of his remaining base pay for the remainder of the term of the employment agreement plus the current cash value of the minimum bonus amounts outlined for such term; and

(ii) the full value of any and all shares and/or options that are unvested shall be paid to Mr. Krebs in cash (and all such unvested shares and/or options shall immediately revert to the Company).

Irina Nashtatik

Ms. Nashtatik’s employment has been terminated and such termination did not result in any payment being made under her employment agreement for termination without cause, constructive termination or change of control.

13

Equity Incentive Plans

Payments Made Under the Equity Plan and Omnibus Incentive Plan Upon Death, Disability, Termination Without Cause or Constructive Termination

In the event of termination of a participant’s employment due to death or disability or termination without cause by the Company, all shares of restricted stock granted to such participant under the Equity Plan and the Omnibus Incentive Plan will generally become fully vested and the restrictions on transferability under the terms of the award will lapse. In the event of termination of a participant’s employment without cause by the Company, all shares of restricted stock underlying performance units awarded under the Performance Unit Program will become fully vested based on actual performance achieved and will be settled after the conclusion of the performance period. If such termination occurs following the end of the performance period, all earned shares of restricted stock vest immediately.

In the event of termination of a participant’s employment due to death, disability or retirement, all options granted to such participant under the Equity Plan and Omnibus Incentive Plan will become fully vested on the date of such termination and will be exercisable thereafter for a period of 30 days.

In the event of termination of a participant’s employment due to death or disability prior to the end of a performance period, performance share awards will generally be deemed earned immediately upon such termination in an amount equal to the amount that would have been earned had the target performance level for the performance period been met, and then prorated based on the number of days in the performance period that have elapsed to the date of termination of employment. In the event of termination of a participant’s employment due to death or disability prior to the end of a performance period, shares of restricted stock underlying performance units awarded under the Performance Unit Program will be deemed earned and vested immediately upon such termination in an amount equal to the amount that would have been earned had the target performance level for the performance period been met. In the event of termination of a participant’s employment due to death or disability following the end of a performance period, shares of restricted stock underlying performance units awarded under the Performance Unit Program will be deemed earned and vested immediately upon such termination in an amount equal to the amount that was earned based on actual performance achieved.

In all other cases of termination, non-vested equity awards under the Equity Plan and the Omnibus Incentive Plan will generally be forfeited.

A more detailed description of the Equity Plan can be found below under the heading “Summary of Equity Plan”. A more detailed description of the Omnibus Incentive Plan can be found below under the heading “Summary of Omnibus Incentive Plan”.

Payments Made Under the Equity Plan and Omnibus Incentive Plan Upon a Change of Control

Unless the Compensation Committee provides otherwise in any particular award agreement, and other than as stated below under “Performance Unit Program,” in the event of a change of control of the Company, awards may be assumed or substitute awards may be made by the Company or its successor that contain similar terms and conditions as the awards issued under an equity compensation plan, without participant consent. If awards are assumed or if substitute awards are made, and if the Company or its successor in the change of control transaction terminates a participant within one year following the change of control, then the award will immediately vest on the date of such termination of employment or service, as applicable.

If the Company or its successor does not assume the awards or grant substitute awards, then:

14

For purposes of the equity compensation plans, a “change of control” generally includes any of the following events:

Performance Unit Program

Under the Performance Unit Program, if the change of control occurs during a performance period, the awards are converted into time-vested restricted stock of the acquiring company based on the target performance level and, if the change of control occurs following a performance period, the awards are converted into time-vested restricted stock of the acquiring company based on the actual performance level achieved. In either case, the awards would accelerate in the event the executive officer is terminated without cause or voluntarily terminates with good reason within 24 months of the change of control. If awards under the Performance Unit Program are not assumed or converted by the acquiring company, then, if the change of control occurs during a performance period, the awards are subject to accelerated vesting based on the target performance level, and if the change of control occurs following a performance period, the awards are subject to accelerated vesting based on actual performance level achieved.

Summary of Employment Agreements with Executive Officers

The Company entered into an employment agreement with Mr. Michael Rost, Chief Executive Officer, effective as of September 14, 2022, and the Company entered into a new employment agreement with Mr. Charles Krebs, Chief Financial Officer, effective as of June 19, 2024. In addition, the Company entered into an employment agreement with Ms. Irina Nashtatik, Chief Financial Officer effective as of July 21, 2022, which employment agreement was amended effective as of May 1, 2024, but then terminated on July 12, 2024. The following section provides information on our employment agreements with the Named Executive Officers.

Michael Rost

The employment agreement with Mr. Rost provides for a base salary of $250,000 and discretionary bonuses as described above under “Executive Compensation Discussion and Analysis – Compensation Components – Incentive Bonuses.” The agreement has an initial term expiring August 29, 2023. Thereafter, the agreement automatically renews each year for successive twelve-month periods, unless the Company provides to Mr. Rost, at least 60 days prior to the expiration of the term, written notification that it intends not to renew the agreement, and the Company did not provide such notice to Mr. Rost prior to its due date. Upon a change of control, the term of the agreement would be extended until the first anniversary of the change of control. Mr. Rost’s employment agreement provides that, if he is terminated by the Company without cause, or if he terminates his employment upon (a) a good faith determination by him that the Company has materially breached his employment agreement, (b) a material adverse change in his working conditions or status, (c) a significant relocation of his principal office or (d) upon or within the one-year period following a change of control of the Company, a good faith determination by him that there has been any of the following: a breach of his employment agreement by the Company, any adverse change in his working conditions, status, authority, duties, responsibilities (including reporting other than directly to the Board of Directors) or any requirement that he relocate his principal office to a location that is more than ten miles from the location of his principal office immediately prior to the change of control, then he shall be entitled to a severance payment as described above under “Potential Payments Upon Termination or a Change of Control – Employment Agreements — Payments Made Upon Termination Without Cause, Constructive Termination or Change of Control.” Mr. Rost’s agreement further provides that, during the term of the agreement and for a period of one year thereafter, Mr. Rost will not, directly or indirectly, compete with the Company by engaging in certain proscribed activities.

15

Charles Krebs

The employment agreement with Mr. Krebs provides for a base salary of $190,000 for the first 12 months and $200,000 for months 13 through 24, and discretionary bonuses as described above under “Executive Compensation Discussion and Analysis – Compensation Components – Incentive Bonuses.” The agreement has an initial term expiring on June 19, 2026. Mr. Krebs’ employment agreement provides that, if he is terminated by the Company without cause, then he shall be entitled to a severance payment as described above under “Potential Payments Upon Termination or a Change of Control – Employment Agreements — Payments Made Upon Termination Without Cause, Constructive Termination or Change of Control.” Mr. Krebs’ agreement further provides that, during the term of the agreement, Mr. Krebs will not, directly or indirectly, compete with the Company by engaging in certain proscribed activities.

Irina Nashtatik

The employment agreement with Ms. Nashtatik originally provided for a base salary of $220,000 and discretionary bonuses as described above under “Executive Compensation Discussion and Analysis – Compensation Components – Incentive Bonuses”, and an initial term expiring on June 30, 2024, while the amendment to the employment agreement increased the base salary to $240,000 for the period from the effective date through an extended term continuing through December 31, 2024, and provided for a bonus in the range of $25,000 to $75,000 payable to Ms. Nashtatik on or before December 31, 2024, which amount is to be determined by the Board of Directors in its sole discretion. The original agreement automatically renewed each year for successive twelve-month periods, unless the Company provided to Ms. Nashtatik, at least 60 days prior to the expiration of the term, written notification that it intends not to renew the agreement. However, the amendment provided that the agreement would not automatically extend and instead would only extend if the Company and Ms. Nashtatik agreed upon an extension, with each party to notify the other by August 31, 2024 if an extension would be entered into. The original agreement provided that, upon a change of control, the term of the agreement would be extended until the first anniversary of the change of control, and if she was terminated by the Company without cause, or if she terminated her employment upon (a) a good faith determination by her that the Company had materially breached her employment agreement, (b) a material adverse change in her working conditions or status, (c) a significant relocation of her principal office or (d) upon or within the one-year period following a change of control of the Company, a good faith determination by her that there had been any of the following: a breach of her employment agreement by the Company, any adverse change in her working conditions, status, authority, duties, responsibilities or any requirement that she relocate her principal office to a location that is more than ten miles from the location of her principal office immediately prior to the change of control, then she would have been entitled to a severance payment as described above under “Potential Payments Upon Termination or a Change of Control – Employment Agreements — Payments Made Upon Termination Without Cause, Constructive Termination or Change of Control.” Ms. Nashtatik’s original agreement further provided that, during the term of the agreement and for a period of one year thereafter, Ms. Nashtatik would not, directly or indirectly, compete with the Company by engaging in certain proscribed activities. However, the amendment to the agreement eliminated such noncompetition provisions. Ms. Nashtatik’s employment agreement was mutually terminated on July 12, 2024 and Ms. Nashtatik has agreed to serve as a consultant to the Company until December 31, 2024 to assist with the transition of her duties to Mr. Krebs in exchange for an upfront lump sum payment of $75,000 with no further payments of any compensation or bonus remaining due.

Summary of Equity Plan

The Equity Plan was adopted by the Board of Directors of the Company on June 15, 2006 and approved by the stockholders of the Company on August 9, 2006. The Equity Plan was terminated on August 13, 2015; no new awards have been granted under such plan since that date, but awards granted under such plan remain outstanding. The purposes of the Equity Plan were:

A more detailed summary of the Equity Plan was included in Proposal 2 of the Company’s Proxy Statement for the 2006 Annual General Meeting and a copy of the Equity Plan was attached to such Proxy Statement as Appendix A, both of which are incorporated herein by reference.

Summary of Omnibus Incentive Plan

The Omnibus Incentive Plan was adopted by the Board of Directors and subsequently approved by the stockholders of the Company on August 13, 2015. The purpose of this Omnibus Incentive Plan is to promote the best interests of the Company and its stockholders by providing key employees and non-employee directors of the Company and its affiliates with an opportunity to acquire a proprietary interest in the Company or receive other incentive compensation on the potentially favorable terms that the Plan provides. It is intended that the Plan will promote continuity of management and increased incentive and personal interest in the welfare of the Company and its affiliates by those key employees and directors who are primarily responsible for shaping and carrying out the long-range plans of the Company and securing its continued growth and financial success, all of which benefits the stockholders.

The Omnibus Incentive Plan:

16

A more detailed summary of the Omnibus Incentive Plan was included in Proposal 3 of the Company’s Proxy Statement for the 2015 Annual General Meeting and a copy of the Equity Plan was attached to such Proxy Statement as Appendix A, both of which are incorporated herein by reference.

Director Compensation

The following table sets forth information regarding the compensation received by each of the Company’s non-employee directors during the fiscal year ended March 31, 2024:

Directors who are not employed by us (“Non-Employee Directors) do not receive any additional compensation for their services as directors. The Compensation Committee reviews the director compensation on annual basis.

Each Non-Employee Director receives an annual retainer of $45,000, with the chair of each standing committee receiving an additional $10,000. Non-Employee Directors do not receive a per meeting fee for ordinary-course Board meetings; however, they receive a meeting fee of $1,000 per non-ordinary course Board meeting (reduced to $750 for telephonic meetings), calculated separately for the Board of Directors and each committee. Generally, each Non-Employee Director receives an annual award of restricted stock with a value of $20,000, although no such awards were granted during the fiscal year ended March 31, 2024. Directors joining the Board of Directors mid-year will receive a pro-rated equity award vesting on the date of the following annual meeting of stockholders.

Upon a change of control of the Company, the awards granted under the Omnibus Incentive Plan to Non-Employee Directors are treated in the same manner as awards made to employees as described above under “Payments Made Under the Equity Plan and Omnibus Incentive Plan Upon a Change of Control.”

17

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information regarding the beneficial ownership of the Common Stock as of July 25, 2024 (the “Record Date”), based on 7,305,942 shares issued and outstanding, by (i) each of the Company’s directors, (ii) each of the Company’s Named Executive Officers, (iii) all directors and officers as a group, and (iv) each person known by the Company to beneficially own, directly or indirectly, more than 5% of the outstanding shares of Common Stock. Except as otherwise indicated, each of the persons listed below has sole voting and investment power over the shares beneficially owned, subject to community property laws, where applicable. Shares are beneficially owned when an individual has voting and/or investment power over the shares or could obtain voting and/or investment power over the shares within 60 days of the date of determination. Unless otherwise indicated, the address of each beneficial owner listed below is c/o Nicholas Financial, Inc., 26133 US HWY 19 North, Suite #300, Clearwater, Florida 33763.

18

19

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth certain information, as of March 31, 2024, with respect to compensation plans under which equity securities of the Company were authorized for issuance:

EQUITY COMPENSATION PLAN INFORMATION

(In thousands, except exercise price)

Item 13. Certain Relationships and Related Transactions, Director Independence and Board of Directors

Transactions with Related Persons

Since the beginning of the Company’s fiscal year ended March 31, 2023, there have been no transactions with related persons, and there are no currently proposed transactions with related persons, required by applicable SEC rules and regulations to be disclosed hereunder. No director or executive officer of the Company, no nominee for election as a director of the Company, and no associate or affiliate of any of them, is or has been indebted to the Company or its subsidiaries at any time since the beginning of the Company’s fiscal year ended March 31, 2023.

Director Independence

In accordance, with NASDAQ rules, the Board has determined that Messrs. Royal, Hutchins, Keating, and Zhu, collectively representing a majority of members of our Board, are independent directors in that they do not have any relationships with the Company and its businesses that would impair their independence.

Item 14. Principal Accountant Fees and Services

Effective August 15, 2022, the Audit Committee engaged Forvis Mazars, LLP (“Forvis Mazars”) as Independent Registered Public Accounting Firm (“Independent Auditors”) to provide certain audit services to the Company, including the audit of the Company’s annual consolidated financial statements and (if required) internal control over financial reporting, quarterly reviews of the condensed consolidated financial statements included in the Company’s Quarterly Reports on Form 10-Q, services performed in connection with filing the Company’s Proxy Statement and other reports with the U.S. Securities and Exchange Commission (“SEC”), attendance at meetings with the Audit Committee, and consultation on matters relating to accounting, tax and financial reporting for the fiscal year ended March 31, 2024. Forvis Mazars has served as the Independent Registered Public Accounting Firm for the Company since August 2022.

Prior to August 15, 2022 RSM US LLP (“RSM”) provided certain audit services to the Company, including the audit of the Company’s annual consolidated financial statements and (if required) internal control over financial reporting, quarterly reviews of the condensed consolidated financial statements included in the Company’s Quarterly Reports on Form 10-Q, services performed in connection with filing proxy statements and information circulars and other reports with the SEC, attendance at meetings with the Audit Committee, and consultation on matters relating to accounting, tax and financial reporting for periods prior to the fiscal year ended March 31, 2022. RSM acted as the Independent Registered Public Accounting Firm for the Company from June 2018 through June 2022.

The Audit Committee has appointed Forvis Mazars as Independent Auditors of the Company for the fiscal year ending March 31, 2025.

Prior Change in Independent Registered Public Accounting Firm

On August 15, 2022 (the “Effective Time”), the Audit Committee approved the engagement of Forvis Mazars as the Company’s new Independent Registered Public Accounting Firm for the fiscal year ended March 31, 2023 and dismissed RSM as the Company’s Independent Registered Public Accounting Firm, in each case effective immediately.

The audit reports of RSM on the Company’s consolidated financial statements as of March 31, 2022 and 2021 and for the fiscal years then ended did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.

During the Company’s fiscal years ended March 31, 2022 and 2021, and in the subsequent interim period preceding the Effective Time, there were no disagreements with RSM on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of RSM, would have caused RSM to make reference to the subject matter of the disagreement(s) in connection with its reports on the Company’s financial statements for such fiscal years.

During the Company’s fiscal years ended March 31, 2022 and 2021, and in the subsequent interim period preceding the Effective Time, there were no reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K), except as previously disclosed in the Company’s Form 10-K for the fiscal year ended March 31, 2020, in which management identified two material weaknesses in internal control over financial reporting relating to the Company’s Sarbanes-Oxley compliance program and design controls. As disclosed in the Company’s Form 10-K for the fiscal year ended March 31, 2021, both weaknesses had been remediated as of March 31, 2021.

The Company provided RSM with a copy of the foregoing disclosures it was to make in a Form 8-K prior to the time the Form 8-K was filed with the SEC and requested that RSM furnish it with a letter addressed to the SEC stating whether RSM agreed with the above statements, and, if not, stating the respects in which it did not agree. A copy of RSM’s letter, dated August 17, 2022, is filed as Exhibit 16.1 to that Form 8-K.

During the Company’s fiscal years ended March 31, 2022 and 2021, and in the subsequent interim period preceding the Effective Time, neither the Company nor anyone acting on its behalf consulted with Forvis Mazars with respect to either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and no written report or oral advice was provided to the Company that Forvis Mazars concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing, or financial reporting issue, or (ii) any matter that was either the subject of a disagreement, as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K, or a reportable event, as described in Item 304(a)(1)(v) of Regulation S-K.

Fees for Audit and Non-Audit Related Matters

The aggregate fees charged by Forvis Mazars during fiscal 2024 and 2023 and by RSM during fiscal 2023 for professional services rendered to the Company in connection with all audit and non-audit related matters were as follows:

20

For the 2024 fiscal year, the Audit Committee concluded that Forvis Mazars’ provision of the services described above was compatible with maintaining Forvis Mazars’ independence. The Audit Committee pre-approved all of such services. The Audit Committee has established pre-approval policies and procedures with respect to audit and permissible non-audit services to be provided by the Independent Auditors.

For the 2023 fiscal year, the Audit Committee concluded that RSM’s provision of the services described above was compatible with maintaining RSM’s independence. The Audit Committee pre-approved all of such services. The Audit Committee has established pre-approval policies and procedures with respect to audit and permissible non-audit services to be provided by the independent auditors.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm

The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the Independent Registered Public Accounting Firm in order to assure that the provision of such services does not impair the auditor’s independence. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. Management is required to periodically report to the Audit Committee regarding the extent of services provided by the Independent Registered Public Accounting Firm in accordance with this pre-approval, and the fees for the services performed to date. During each of the fiscal years ended March 31, 2024 and 2023, respectively, all services were pre-approved by the Audit Committee in accordance with this policy.

21

PART IV

Item 15. Exhibits and Financial Statement Schedules

(1) Financial Statements

See Part II, Item 8, of this Report.

(2) Financial Statement Schedules

All financial schedules are omitted as the required information is not applicable or the information is presented in the consolidated financial statements or related notes.

(3) Exhibits

22

101.INS Inline XBRL Instance Document **

101.SCH Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents **

104.The cover page from the Company’s Annual Report on form 10-K for the year ended March 31, 2024, has been formatted in Inline XBRL. **

23

24

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

25